Improving Physician Practice through Alignment of Incentives

The following commentary was co-authored by Gwen Miller, MD, Chair, Seton Family of Doctors Quality Committee, and Jason Reichenberg, MD, Chair, Seton Family of Doctors Clinical Practice Council.

Improvements to a physician’s practice can be prompted by learning new information, acquiring a technical ability or simply by reconsidering their current approach. But what motivates physicians to make these sometimes-difficult changes, given that we gravitate toward the status quo? Physicians changing practice when doing so provides, compared to current practice, more benefit than harm, more advantage than disadvantage and more good than bad when considering the overall impact on their patients, their practice or institution, and themselves and loved ones. In affecting change, external incentives for physicians play an important role.

One such incentive system — value-based healthcare — rewards value defined by patient-centered outcomes achieved per health care dollar spent. This contrasts with the dominant fee-for-service reimbursement system that rewards other characteristics such as volume and intensity of services. Unfortunately, the way that many organizations have tried to incentivize value perpetuates a perceived conflict between patients’ needs and a provider’s financial interest. This is a false conflict, one that is created by fee-for-service reimbursement systems but in fact does not have to exist. Patients’ needs and providers’ self-interest can — and should — align, and a successful value-based health care system can facilitate that.

So how do institutions and programs incentivize patient-centered outcomes? Some try to tie patient outcomes to reimbursement. Although reasonable at first glance, this maintains the falsehood that physicians’ behavior is driven by financial considerations only. Physicians did not endure long schooling and training so that we could swayed by simple rewards. Rather, we are versed in how to care for patients, and consider any activity that does not contribute to that goal to be a distraction.

Finding a New ModelSeveral value-based reimbursement systems have been devised, each with its advantages and disadvantages. Examples include bundled payments, most readily applied to discrete episodes surrounding a particular intervention; capitated arrangements such as the medical home and accountable care organizations, applicable to primary care; and shared savings plans. Some conditions don’t fit well into any of the existing models, so various pilot projects are being tested to see what works.

The most effective systems disrupt the fee-for-service reimbursement system by rewarding physicians for improving value with incentives other than financial. Providers can instead be motivated by:

Seeing the direct impact of the improved care on their patient population;

Working in more collaborative relationships with their health care team;

Decreasing their time spent doing low-value activities such as clicking boxes on a computer; and,

Being offered opportunities for personal and professional development.

These are just a few of the incentives, and it’s no easy task to create a system that supports them. In this way — and only in this way — will physicians be able to get off the hamster wheel of doing more, more and more to mitigate the risk of negatively impacting patient outcomes. The resulting freedom will enable us to engage in impactful value-based health care systems that both increases value for patients and improves physician quality of life.